Combating climate change through innovative technology
Climate change is one of the most urgent topics of the 21st Century. Read here what this has to do with the real estate sector and how smartengine helps to combat climate change.
Climate change is one of the most urgent topic of the 21st century. Governments are starting to take action and regulate more and more the amount of carbon emissions. The real estate market – as the largest single contributor to the carbon footprint (current buildings account for 40% of global energy consumption) – is especially going to be under pressure. [1]
The EU committed itself to achieving the long-term goal of greenhouse gas neutrality by 2050 (so-called “Green Deal” of the EU Commission). The program includes several climate protection measures for the real estate sector. By 2050, the building stock shall become largely climate-neutral. This can be achieved by reducing the primary energy demand. The government therefore has little choice but to a) invest in the implementation of new energy standards for buildings and b) penalize inefficient buildings, e.g. CO2 tax.[2]
Yet it is not only in Europe that climate change is gaining in importance. Just last year New York passed Local Law 97 that specifically addresses buildings CO2 emissions. Among other things, the city’s largest buildings must reduce 40% of their emissions by 2030 and 80% by 2050. Resisters will be heavily punished with penalties of up to 1M$ per year. [3]
Investors and managers in real estate are not only catching up with recent climate regulations but are already preparing themselves for even more, potentially heavier, government policies. Brendan Wallace, co-founder and managing partner of “Fifth Wall”, the largest venture capital firm specializing in real estate technology, warns against underestimating the importance of the real estate sector. The real estate sector – as the biggest single culprit in climate change – shouldn’t be allowed to continue avoiding its responsibility. Especially as the public, financial markets and government agencies increasingly focus on climate change. For this reason, the California-based venture capital firm launched the $200m Carbon Impact Fund in January 2020.As we can see here, the attention of (real estate) investors is increasingly focused on efficient and sustainable buildings that meet future environmental requirements.[4]
Also, Blackrock, the world’s largest independent asset manager, expressed its views on climate change in 2020. In his annual CEO letter, Executive Director Larry Fink addressed the importance of taking climate change into account for a sustainable shareholder value. One could no longer avoid factoring climate change into strategic business development, not least because of the threat of legislative measures.[5]
Not only because of new legislation, but also because people start to recognize climate change as a serious threat to our planet, building developers and operators must focus on so-called “green buildings” and adapt accordingly. But what actually defines a “Green Building” and what requirements must be taken into account?
A “Green Building” is a building that, in its design, construction and operation, reduces or eliminates negative effects on our climate and may also have positive effects on the environment. One characteristic of this would be the efficient use of energy. There are already meaningful certifications, such as LEED, for measuring the sustainability of construction products and buildings. An effective approach to achieving the government’s legally defined targets in the real estate sector and classifying your building as a “green building” is an intelligent and sustainable building management.
The majority of buildings are not managed according to demand and are therefore inefficiently regulated. By using smartengine technology, the total energy consumption of buildings can be reduced by up to 40% through presence-based control (ventilation, lighting, air conditioning, heating) and thus comes very close to the set target values. smartengine technology can achieve up to 29 LEED points for certification. Not only are CO2 emissions reduced, the product also leads to better profitability through lower ancillary costs and thus finances itself in just a few years. According to a survey by ROM Technik, in a 10,000 m² office, between 27,000€ – 39,000€ in operating costs and approximately 86t CO2 emissions can be saved every year through the intelligent operation of a building. In addition, software add-ons, such as space usage analysis, free workplace and room search, indoor navigation, human-centric lighting (HCL) and many more, increase the well-being of building users and make them more productive and satisfied.
A group of multinational companies from the financial industry has created the so-called „Net-Zero Asset Owner Alliance“. In September 2019, the alliance announced to only invest in carbon neutral assets by 2050 in front of the United Nations.[6] Some other companies are following. The list of companies setting themselves carbon emission reduction goals is impressive: Microsoft, Google, Dell, Amazon, Facebook, Apple, Microsoft, Allianz, SwissRe, BNP Paribas, Clark Construction, Cisco, Citibank, Coca-Cola, Tesla, BMW, United Airlines and many more.[7] Most of these companies are using smartengine technology already today.
One thing is certain:A shift in the construction and real estate industry is inevitable. It’s time to use real estate more efficiently and contribute against climate change by implementing sustainable technologies.
[1] World Business Council for Sustainable Development, http://docs.wbcsd.org/2014/10/EEBManifesto.pdf
[2] European Commission, https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en
[3] The City of New York, https://www1.nyc.gov/assets/buildings/local_laws/ll97of2019.pdf
[4] Fith Wall, https://www.egi.co.uk/news/fifth-wall-launches-200m-carbon-fund-in-pitchfork-moment/
[5] Washington Post, https://www.washingtonpost.com/gdpr-consent/?destination=%2fbusiness%2f2020%2f01%2f14%2fblackrock-letter-climate-change%2f%3f
[7] Forbes Magazine, https://www.forbes.com/sites/blakemorgan/2019/08/26/101-companies-committed-to-reducing-their-carbon-footprint/#4bd60889260b
